7 habits of highly effective digital enterprises

Transforming your firm into a “digital business” is particularly challenging because digital touches every function while also demanding the rapid development of new skills and investments that are very different from business as usual. 

An article in the May 2014 issue of McKinsey Insights, published by McKinsey & Company, features seven habits that highly effective digital enterprises share:

1. Be unreasonably aspirational. Being "unreasonable" is a way to jar an organization into seeing digital as a business that creates value, not as a channel that drives activities. Some companies frame their targets by measures such as growth or market share through digital channels. Others set targets for cost reduction based on the cost structures of new digital competitors. 

2. Acquire capabilities. The skills required for digital transformation probably can’t be groomed entirely from within. Leadership teams must be realistic about the collective ability of their existing workforce. Leading companies frequently look to other industries to attract digital talent, because they understand that emphasizing skills over experience when hiring new talent is vital to success, at least in the early stages of transformation. 

3. ‘Ring fence’ and cultivate talent. Digital talent must be nurtured differently, with its own working patterns, sandbox and tools. 

4. Challenge everything. Leaders must aggressively challenge the status quo rather than accepting historical norms. Look at how everything is done, including the services you offer and the market segments you address, and ask “Why?” 

Digital leaders examine all aspects of their business—both customer-facing and back-office systems and processes—for digitally driven innovation. They also think expansively about partnerships to deliver new value-added experiences and services. 

5. Be quick and data driven. Rapid decision-making is critical in a dynamic digital environment. Organizations need to move to a cycle of continuous delivery and improvement. 

Integrating data sources into a single system that is accessible to everyone in the organization will improve the “clock speed” for innovation. 

6. Follow the money. Many organizations focus their digital investments on customer-facing solutions. But they can extract just as much value, if not more, from investing in back-office functions that drive operational efficiencies. A digital transformation is more than just finding new revenue streams; it’s also about creating value by reducing the costs of doing business.

7. Be obsessed with the customer. Rising customer expectations continue to push businesses to improve the customer experience across all channels. 

A healthy obsession with improving the customer experience is the foundation of any digital transformation. No enterprise is perfect, but leadership teams should aspire to fix every error or bad experience. Processes that enable companies to capture and learn from every customer interaction—positive or negative—help them to regularly test assumptions about how customers are using digital and constantly fine-tune the experience.

Read more from McKinsey Insights. 

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